Understanding UAE Contract Termination: What Compensation Should You Expect?

Types of Contracts

There are 2 types of contracts:

a) Limited (2 years or more but with a specific end date)

b) Unlimited (With no specific end date)

Limited Contract

If the employee resigns prior to the completion of the preset contract expiry date, he/she shall be liable to compensate the employer with 1 and a half months of gross salary (e.g., AED 3000, if the salary is AED 2000 per month). If the employer terminates the contract prior to the contract expiry, the employee will be paid 3 months' salary (gross salary) by the employer.

Unlimited Contracts

Since there is no fixed date for contract expiry for these types of contracts, it shall be one month's notice, which has to be given by either party (employer or employee). However, if either of them decides to part ways without providing one month's notice, "compensation in lieu" has to be given (i.e., one month's salary).

Should you have any queries on terminations, please feel free to ask.

Regards,

One of my employees applied for 14 days of annual leave but returned after 18 days without informing us of his late arrival. We attempted to contact him before his return, but all the numbers he provided were unreachable. Upon his return, I asked him to hand over his passport and look for a new job. He left, saying he would retrieve his passport, but he did not return for one month. We tried calling his mobile, but it was switched off. After a month, he approached me and requested to cancel his visa.

Termination for Absconding

Can I terminate him for absconding since he failed to inform us beforehand, which negatively impacted my business? Additionally, will he be entitled to gratuity and an air ticket? If so, how should I calculate his gratuity (based on salary or full pay)?

He has completed one year of service with us and in the 13th month applied for 14 days of annual leave. His monthly salary is AED 4500 (Basic AED 2000).

Regards,
KS